Question

A Company’s Current Assets are ₹ 6,00,000 and working capital is ₹ 2,00,000. Its Current Ratio will be ______.

Options

• 3 : 1

• 1.5 : 1

• 2 : 1

• 4 : 1

Answer 1

A Company’s Current Assets are ₹ 6,00,000 and working capital is ₹ 2,00,000. Its Current Ratio will be 1.5 : 1.

Explanation:

Working capital = Current Assets − Current Liabilities

2,00,000 = 6,00,000 − Current Liabilities

Current Liabilities = 6,00,000 − 2,00,000

= ₹ 4,00,000

Current Ratio = `"Current Assets"/"Current Liabilities"`

= `(6,00,000)/(4,00,000)`

= 1.5 : 1